Simply be considered unethical or poor management

Assignment Help Operation Management

Reference no: EM131485066

John Halstad and Judy Maxson formed a partnership to renovate and resell (flip) a house. According to their agreement, Maxson would finance the purchase of the house and its renovation, and Halstad would provide labor and supervision of the renovation work. Maxson would be paid from the profits of the sale, and the remaining profit would be split evenly. If the sale resulted in a loss, this would also be divided evenly. Maxson paid $220,000 for a house and another $50,000 for its renovation. Maxson and Halstad agreed that the renovation would be finished in six months. Halstad was allowed to live in the house to facilitate the renovation. After more than a year, the renovation still was not done, and the cost far exceeded the $50,000 originally budgeted. Halstad rarely communicated with Maxson, and when she learned that the money she had borrowed for the renovations was gone but the house was not even close to being finished, she understandably became worried. Maxson told Halstad that if he was going to continue living in the house, he would now have to pay rent and the utilities. Soon thereafter, Halstad left and went out of state for a family emergency, and claimed that he would be back as soon as he could. However, Halstad never returned, and Maxson lost touch with him. Maxson was forced to take over the project and discovered that Halstad had failed to pay numerous bills, paid too much for unnecessary items, and had even misappropriated funds for his personal use. Maxson saw the project through to completion, paid all the expenses for the renovation (which ended up being over $300,000!), and sold the property. She then brought an action to dissolve the partnership and to recover damages from Halstad for breach of contract and wrongful dissociation from the partnership.

Maxson claims that Halstad wrongfully dissociated from the partnership. If this is true, when did this dissociation occur? Also, why was his dissociation wrongful?

Which of Halstad’s actions could simply be considered unethical or poor management, and which constitute a breach of the agreement?

2-3 paragraphs

Reference no: EM131485066

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